Business Lyceum

e-Letter
Practical Instruction in the Arts and Sciences of Making Money

MARCH 2000


Greetings & Salutations:

Over the past 6 months, in Discussion Group after Discussion Group, I have seen posting after posting, asking about getting a Credit Card Merchant Account.

Having had a Credit Card Merchant Account for nearly 30 years ... even before it could be used for mail orders ... and never having been denied a Merchant Account, I paid little attention to those postings ... mostly I just skipped over reading them. -- Then, last week, with nothing to do, I happened to read a couple of the postings about getting a Merchant Account.

After reading those postings, I went back through my files and read a number of previous postings. Then, I went on-line and read a variety of articles on the subject ... and visited a few websites that offered Credit Card Merchant Accounts.

To say I was disappointed by what I read would be an understatement.  It appears the vast majority of posters and article writers have little, if any, working knowledge of the banking and credit card industries.

So, let me explain ...

How to really get a Credit Card Merchant Account!

During my tenure in the banking business, our small offshore bank obtained licenses from both VISA and MasterCard to both issue Credit Cards to our customers and establish Merchant Accounts.

Although we were never able to initiate the programs ... owing to the fact that our bank was not FDIC insured ... I was obligated to study and learn the approval methods employed within the banking and credit card industries for both the issuance of Credit Cards and the establishment of Merchant Accounts.

I will not belabor you with the details, however, the establishment of Credit Card Merchant Accounts is, essentially, "risk free" for the bank.

Think about it. -- A Credit Card Merchant Account is nothing more than a record keeping process for the bank that established the account with the merchant.

Unless the credit cardholder making a purchase from the merchant has a credit card issued by the same bank there is no ìunsecured debtî obligation on the part of the bank.

Money flows into the bank account of the merchant from issuing banks around the country (or even the world) and is simply held in the merchantís checking account. -- The bank has no "unsecured debt" problem with those funds. -- They even get paid a fee by the card-issuing bank for handling the transaction and another fee from the merchant for maintaining the account.

Should a cardholder who purchased something from the merchant "dispute" the charge, the bank loses nothing. -- The bank simply debits the merchantís account for the amount of the disputed item ... commonly referred to as a "chargeback."  They even get to keep the fees they were paid. -- The merchant loses the full amount of the charge plus the fees paid when the original credit card charge was made.

That being the case ...why then is it seemingly so difficult for Mailorder and Internet Marketers to get a Merchant Account?

It isn't the products they sell or how the products are sold.  It is, rather, the nature of the "people" who own and operate those kinds of businesses.

By and large, Mailorder and Internet Marketing companies are the domain of "beginners" and "con-men" ... both of whom are feared by the bankers. -- I don't think I have to explain why bankers fear con-men, but ...

Why do bankers fear "beginners?"

"Beginners" are feared because they still have a "consumer" mentality. -- Meaning the bank will have to explain, and explain, and explain, every charge made to the merchant's account on credit card transactions.  And, should there ever be a "chargeback," the bank knows it may have to fight the merchant; sometimes tooth and nail, in order to justify the debit.  (Some "beginners" have even been known to sue the bank for making chargebacks to their account.)

Another reason the bankers fear "beginners," is that "beginners" in any business ... more especially Mailorder and Internet Marketing ... are oftimes hard-pressed to keep sufficient funds in their checking accounts to cover any chargebacks that may occur.  That leaves the bank holding an "unsecured debt."  ("Beginners" do it by accident, "con-menî" do it on purpose.)

Statistically, over 90% of small businesses fail within their first year.  (That percentage is even higher for small Mailorder and Internet Marketing companies.) -- A  statistic with which every banker is familiar, and the ìrealî reason they are more than a little reluctant to provide services; extend credit or loans, to small start-up businesses ... especially small start-up Mailorder and Internet Marketing businesses.

That is about the only reason a bank will refuse to open a Merchant Account ... not the flimsy excuses they use to protect themselves from unwarranted discrimination lawsuits. -- It is NOT the product, or the method of sales, it is the "person" behind the business.

But, stop and think about it for a minute. -- How many thousands, upon thousands, of mailorder companies have Merchant Accounts? -- How may thousands, upon thousands, of companies selling Adult Products have Merchant Accounts? -- If the banks didn't establish Merchant Accounts for them, how did those companies get their accounts?

NO -- they didn't get their accounts by using the ìtricksî espoused by some of the people who sell courses on getting a Merchant Account. -- The bankers have read the same stuff.  They know and recognize all those stupid tricks. -- Using those tricks only creates a ìsneaky imageî for you in the eyes of the banker.

If you really want a Credit Card Merchant Account, start with your local, hometown, bank ... the one where you have your business checking account. -- Build a rapport with your banker.

Whether you know it or not, only the very largest banks process their own credit card transactions. -- Your local bank may be a small independent, located in a rural area - but - they can (and will; when asked) provide their Merchant Accounts with electronic processing through the processing center they use - and - again if you ASK, the processing center can connect the electronic processing directly to your on-line order system.  (My current bank uses the NOVUS system.)

Contrary to what you might believe, your banker pulls his, or her, britches on the same way you do ... one leg at a time.  They are only human and, as such, respond to the same stimuli as any other human being. -- Don't try to use any "tricks" on them. -- Just be yourself, explain your situation, and WORK WITH THEM to establish your account.

By doing so, you will show the banker that you are losing your "consumer mentality" (which they fear) and will be a "responsible"  and "profitable" customer for the bank. -- Get to know your banker.  Give your banker an opportunity to get to know you.

And, remember, it doesn't matter what you are selling, or how you are selling it ... it is always a matter of "who" you are in the eyes of your banker.

Hey ... don't give me any nonsense about selling Adult Products. -- I, personally, know at least a dozen men (and a few women) who have made fortunes with those products and have ALWAYS had a Merchant Account and have never been denied a Merchant Account (at any time). -- Why? -- Because they are "real" business people without any ties to the "sleazy" underworld of pornography (or crime).

The very few bankers who do object to giving a Merchant Account to companies who sell Adult Products do so ... not because of the products themselves ... because of the "sleaze" factor of the people involved in the industry. -- A problem that can be overcome by allowing the banker to get to know YOU ... not by the reputations of some of the people in the industry, but, rather, on your own, personal, merits.

If you can't find a banker with whom you can build a personal rapport, then (and only then) allow your self to be subjected to the fees, and costs, charged by the Credit Card processors. -- Then, after six months to a year of allowing that processor to handle your credit card charges ... with limited chargeback activity ... take your records to your local banker and ASK for a Merchant Account again. -- By then, you will be able to prove to your banker that your business can be a "responsible" and "profitable" customer for your bank.

If you have a heavy chargeback factor, find out "why" your customers are disputing the charges to their credit cards.  Then, correct the problem; whatever it is, before you go back to your local banker.

Of course, the whole endeavor hinges on your ability to present and express yourself as a "real" business person ... instead of the willy-nilly "beginner" (or "con-man") they fear.

'Nuff said. -- Now, let's explore some ...

Comments, Questions & Answers from Business Lyceum Attendees!

In last month's issue, I answered a question from Attendee Sydney Freeman (luxury@homemoneymax.com) about where she could find information about products from other countries. -- I answered her with my usual brilliance -- but ...

Attendee Andreas Sass (hasass@hotmail.com) wanted to add his 2-cents worth, to wit ...

"There are tons of sites on the Internet where you can start your search, such as the following:

http://www.jeta.ru    http://www.tradelead.com    http://www.eckorea.net/ECMarket

http://manufacture.com.tw/trade.htm    http://www.ec21.com/tops/index.html

http://www.tradetaiwan.com    http://asiatrade.com/Mkt.html

   http://www.commerce.com.tw/mail   http://www.thedollar.com  http://www.tradeserv.com

http://www.asiannet.com

This should get your started looking for buyers and sellers."


NOTE:  I didn't  check out those websites, so, if'n you're interested, you'll have to check'em out yer ownself.

Q:  Then, Andreas presented the ol'master (me) with a problem to solve.

"I've been reading your BusinessLyceum and I like what I see.  So now I have a problem I hope you can help me with it.  It's mostly an Internet question.  So here goes.

A little while ago, I was viewing the web site of a company.  I noticed on one page that they had a plant for sale.  I thought this would be great for my first Finders Fee deal.  My problem is, how do I use the Internet to find my buyer?  Where on theInternet would I start looking for a buyer for this plant?  I've looked at all the sites I've listed above, but those are only for import and export deals.

Part 2 of my problem is just the opposite.  I came across this company's plant for sale by accident.  My other problem would be how do I find other plants for sale? -- I hope you can help me."

A:  Thank You for your kind comment about my e-Letter - but - shhh! -- don't tell nobody -- I ain't an "internet person."  I only write this e-Letter so my readers can learn some truth about doing business and making money ... in an Internet Jungle filled with misinformation; half-truths; pure, unadulterated bullstuff (you know what I mean);and out-and-out bare-faced lies.

But, even though I am not an "internet person," I would start the same way I would start if I were looking for a buyer in the more conventional (paper & ink) resources.

First, I would prepare a brief (one-page) description of the business for sale ... without divulging enough information that someone could locate it without me. -- Then, I would begin searching for companies involved in the same industry ... or any industry that relies upon businesses like the one for sale for raw materials, products or services.  (Of course, I would go looking in trade directories instead of on the Internet.)

Businesses involved in the same industry, may want to acquire the plant to expand. -- Businesses that rely upon businesses like the one for sale may want to acquire the plant to control their own source of supply.

Once I had a list of possible candidates, I would write each of them a letter advising that I had a possible acquisition target for them ... including a copy of the brief description of the business for sale to whet their appetite.

When one (or more) of those companies inquired about the possibility of seeing the business ... or just request more information ... I would make a copy of their inquiry (blanking-out all identifying information) and send that copy, along with a cover letter to the party offering the plant for sale.

In that cover letter, I would tell the "seller" that I had a possible buyer for the plant ... referring them to the copy of the letter (or letters) of inquiry you enclose. -- In that letter, I would ASK the "seller" if they would be willing to pay a "commission" (don't mention Finder's Fee unless, or until, they do). -- Once you have a "written" commitment from them for your fee, send them a true copy of the letter (or letters) of inquiry you have received ... by Certified Mail; Return Receipt Requested, so you can prove they received the contact from you.

Once you have done that ... stand back and leave'em alone.  If a deal is made, you will be paid your fee.  (Highly recommend you read my Finder's Fee course ... available in the "POWER TOOLS" at the Business Lyceum.)

In answer to  "Part 2" of your question:  Most often, finding businesses for sale is more a matter of chance than design ... just as you discovered one. -- Then again, if you get a number of inquiries about the business for sale, only "one" of those parties can buy the business, so ...

Send letters of inquiry to other businesses in the same industry ASKING if they would consider selling their business ... include a copy of one (only one) of the letters of inquiry about buying a business like theirs.  If one (or more) of those businesses respond that they business might be for sale to the right party, ASK for some brief details about the business and, of course, get them to commit to paying you a "commission" if they sell their business to one of your contacts. -- Then, just follow through as you did with the first business.

Hope that helps!


Then, I had another Question on the same subject.

Q:  Attendee Don Evans (donevans@erols.com) wrote to ask:

"I just finished reading your Finder's Fee manual and it is great!!! -- I never believed I would start a new career at age 63! --I do have a question. Are the buyer/sellers(for the purpose of finder fees) always in the same country? Otherwise it would be import/export would it not?"

A:  I am pleased that my Finder's Fee course has inspired you to begin a new career.  Don't forget, Colonel Sanders was older than you are when he started Kentucky Fried Chicken ... he did hokey-dokey. -- Now, to answer your question.

A finder can work with buyers and/or sellers in any country.  As a finder, you DO NOT get involved in the import, or export, of the product ... you simply introduce the importer in one country with the exporter in another country.

Business is Business the world around.

Usually, I try to work with "sellers" in the U.S. -- getting my fees from them.  Then, when I bring them a buyer from overseas, I still get paid when the sale is made.  But, I have made a bundle of money working with "sellers" overseas ... finding them "buyers" in the U.S. -- As long as you "Get it in writing.  Put it in writing." (as fully explained in my course) your deal is sound.


Well ... that's it for this month. -- In order to make every issue responsive to YOUR needs, please send me your questions; or tell me what sources or resources you need to build your business; or give me any thoughts you want to share with your fellow members.

Believe it or don't ... I ainít a mind-reader. -- Ifín you doesn't tell me what you need, I may never touch upon the information, sources or resources you need.

This is your publication for you to use to your benefit ... I am just your moderator.

 Until next month, keep well ...

J.F. (Jim) STRAW
Super Finder & Ex-Banker

Thought For The Month!

"What good is running if you're on the wrong road?" -- English Proverb

Can you stump the old master? -- Betcha can't!

Over the past 40 years (man and boy), I have made bundles of money in direct selling, service contracting, wholesale merchandising, entertainment (I was a professional Trumpet player, vocalist & Radio Announcer), freight forwarding, import/export, retail merchandising, warehousing, real estate, electronics manufacturing, finder's fees, closeout merchandising, financial brokerage, business consulting, steel fabrication, gold and coal mining, offshore banking, mailorder, writing, and publishing. -- That being the case ...

No matter what business you're in ... whether you're just starting, well on your way, or at the top of the heap ... I've probably been where you are, done what you are doing. -- So ...

Anytime you have a question about 'how' to do something in your business - or - if you have any comments about anything I've said in issues of this e-Letter; or if you want to add your 2 cents worth ... just "ask" me or "tell" me.

Send your Questions, Comments or 2 Cents Worth to ...

eletter@businesslyceum.com

with "Question" - "Comment" - or, "2 Cents Worth" in the SUBJECT.

If I, personally, don't have an answer to any question you may ask, I will contact some of the professionals in your field of endeavor (I will probably know one or more personally) to get the real 'skinny' for you.

Making Money is FUN & EASY when you know how! Learning "how" is Fun & Easy too -- when you use the ... FREE Reports ... FREE Resources ... FREE Newsletter ... available from the "Business Lyceum."

Jim Straw's Business Lyceum